[Caixin network] (reporter Lu Bingyang) China Railway Corporation (hereinafter referred to as China Railway) from two years ago to emphasize their own repair locomotive vehicles, which will save a large amount of maintenance expenditure for itself. CRRC Corporation Limited by Share Ltd (hereinafter referred to as Zhongche, 601766.SH) had hoped to rely on maintenance to expand profits, but now blost a lot of orders due to changes in customers. 

Maintenance of locomotive and rolling stock is a ten billion market. In 2015 Zhongche domestic business total orders are 207 billion 700 million yuan, of which the maintenance orders are 28 billion 35 million yuan, accounting for 13.5%. The market went to an important node in 2014. Zhongche official has said to the new financial reporter: from 2014 onwards, EMU began to enter the mass return to factory maintenance period, will bring considerable benefits to Zhongche.

Now in retrospect, this idea is just wishful thinking. The huge annual railway construction and purchase of vehicles produced huge expenditures, which is a huge pressure  for China Railway, the recent sharp decline in freight volume and makes China Railway Co., more and more attention to tightening cost, throttle starts from vehicle maintenance. 

Self-repair cost savings of 1 billion 

The counterpart of China Railway Co., said to the new financial reporter, since April 2015, China railway command that enterprises continue to improve the level of maintenance, reduce costs, increase efficiency, and its target is now most China Zhongche delivery business gradually pull back. 
[Caixin network] (reporter Lu Bingyang) China Railway Corporation (hereinafter referred to as China Railway Corporation) from two years ago to emphasize their own repair locomotive vehicles, which will be a large amount of iron and maintenance expenditure.Caixin [] (reporter Lu Bingyang) China Railway Corporation (hereinafter referred to as the total iron) from two years ago began to emphasize their repair vehicles, which will be large maintenance expenditure of total iron, aCaixin [] (reporter Lu Bingyang) China Railway Corporation (hereinafter referred to as the total iron) from two years ago began to emphasize their repair vehicles, which will be large maintenance expenditure of total iron in the nextCaixin [] (reporter Lu Bingyang) China Railway Corporation (hereinafter referred to as the total iron) from two years ago began to emphasize their repair vehicles, which will be large maintenance expenditure save a total ironCaixin [] (reporter Lu Bingyang) China Railway Corporation (hereinafter referred to as the total iron) from two years ago began to emphasize their repair vehicles, which will amount to save a total iron maintenance

He said to the Caixin reporter: for example, the China Railway divides the locomotive maintenance into 6 grade C1-C6, and C1 C2 for minor repair, C3 C4 for medium repair, C5 C6 for major repair.All major repairs and parts of medium repairs shall be borne by Zhongche, minor repairs were borne by China Railway before.

China Railway has been on their own hands to repair the locomotive from 2013 listing which is reflected in the Zhongche announcement, namely 2013-2015 Zhongche locomotive maintance orders respectively from 3 billion 38 million yuan dropped to 873 million yuan. And for the harmony locomotive, the total realization of the C1-C5 of the independent repair from 2015. At the same time, C4 and C5 repair maintenance time than the original to Zhongche responsible for the compression of the 30%. He also revealed that in 2016, China Railway will not only continue to adhere to the C1-C5 repair all independent, but also the highest level of locomotive repair to repair C6, specifically C6 repair by China Railway and Zhongche joint undertake. 

Breaking through the blockade of intellectual property rights

The maintenance vehicle relates to drawings,etc, Zhongche once wanted to build business barriers by controlling the technical data. The people closed to Zhongche revealed: in early 2015, A number of enterprises including China Railway and Zhongche started negotiations on intellectual property rights, during which Zhongche enterprises hold together to boycott, the two sides were in a atalemate, making negotiations difficult. China Railway finally suspended the purchase of vehicles, successfully broke the deadlock, and in the same year at the end of October and China agreed: Existing contract or expressly agreed between Zhongche, the north and South car and the former Ministry of Railways are recognized as
common intellectual property rights owned by China Railway and Zhongche. He also reveled that China Railway has demanded the delivery car, which belongs to the technical information maintenance enterprises to Zhongche vehicle for related drawings etc.. These data helps China Railway enterprises digest core technology of Zhongche, breaking  maintenance technology blockade.

Changing the motor car repair procedures

China Railway's greater ambition aimed at the EMU overhaul, which is divided into 1 or 2 repair, that is, "the daily repair", to 3 or 4, 5 level are called "senior repair". In the past "daily repai" for China Railway, 'senior repair" is monopolized by Zhongche.

The situation has changed in 2015. That year, China Railway in Shenyang, Chengdu EMU advanced repair base put into operation, Beijing, Shanghai, Wuhan depot expansion and reconstruction, China Railway also built 2, expanded 6 EMU. In 2015, China Railway completed 398 sets of EMU senior repair, accounting for 40% of the total number of senior repair, representing an increase of 50% in 2014. In the maintenance procedures, China Railway has also started to do the article. The people related to Beijing Railway Bureau revealed that in 2015, China Railway carried out the first class of the maintenance of the railway mileage cycle test, to extend the maintenance cycle, means to reduce the maintenance frequency, and more vehicles can be transfered in to operation in the fixed time period.

Beijing-Shanghai high-speed railway EMU, for example, the first level repair all are extended from 4000 km to 5500 km, the Beijing-Shanghai high-speed railway releases 150 sets of EMU each day. And for the CRH380 type part of the EMU, the length of senior repair will be extended from 600000km to 1200000km. Pilot work is still carried out. According to the Caixin reporter, a senior repair of CRH380 type EMU spends about 25 million yuan. If the pilot is successful, the benefits will be significant.

Chinese Zhongche ceded interests

China Railway and its predecessor the Ministry of Railways has always been the first big customer of Zhongche and North South car before merging, from China Railway order share had more than Zhongche total order 70%. In fact, the seller and the buyer has the origin, Zhongche was directly affiliated enterprise of the Ministry of Railways formerly. Both of them like a father and son in history, at present, like brothers. Now China Railway's "Rings are hard", if the conflict of interest, Zhongche is the first to bear brunt.

Now the growth rate of domestic rail transportation equipment is gradually slowing. It is expected domestic new vehicle business income of Zhongche will fall more than 10% in 2015, which will continue the downward trend in 2016. Zhongche is to transfer profit growth point from the new vehicle to after-sale maintenance. China Railway timely opened vehicle maintenance system reform is one disaster after another to Zhongche. 

The person added that China Zhongche has not yet released 2015 annual report, but EMU maintenance revenue is expected to reach 12 billion 600 million yuan, in 2016 to reach 15 billion yuan. Maintenance business was expected to grow at an average annual rate of 20% to around 2020 to stabilize. But at the moment, there is a big increase in uncertainty.

Dispute operation security

China Railway are now in a strong position than Zhongche. Zhongche has not too many ways to reverse the situation, only the operation safety is the focus of speech topic, risk assessment and control between them also really is the proper meaning of title of China Railway to promote reform.

The person closed to China Railway Equipment Enterprises believe that China Railway EMU maintenance ability and lack of experience, the railway personnel and equipment shortages, which cannot match buiness volume growth, is worrying.

For example: Wuhan EMU Depot senior repair had completed 141 groups in 2015, ranking first in the railway depot, growed 143% compared to 58 groups of 2014, most of motor cars deports were in the overload state. He reminded that the maintenance companies to avoid the occurrence of the carrot and not wash mud, and China Railway maintenance team is its short board. According to the person to understand, although trains employees of China Railway grew 1/4 over the previous year, but still lower than the number of procedures for regulation of attachment. The age structure of existing staff is not reasonable, maintainers of way-train and trucks are older, and the motor cars' are too young. He said that the workers under the age of 30 in total vehicle maintenance system accounted for all staff of nearly 70%, which is much higher than ratio of Zhongche,the training quality of young maintainers also needs to be improved. 

But China Railway is full of confidence. the person from China Railway responsed to Caixin reporter that their locomotive maintenance system reform work is solid, with a set of advanced maintenance measures, which can ensure the railway passenger and freight transport safty.

At present, China Railway has also continued to expand the maintenance of the territory and has built 10 overhaul base enterprises, these maintenance bases in Northeast, North China, Southern China, central China, southwest, northwest region. This layout means, do not rule out the maintenance enterprises continue to penetrate to the city subway rail vehicle maintenance field, full of competition with Zhongche in maintenance field.